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State Assemblyman Fred W. Thiele Jr. has introduced legislation proposing a new tax on real estate transactions, modeled on the one used to raise revenues for the Community Preservation Fund, to fund a regional program to make houses more affordable for moderate-income, first-time homebuyers.

The bill, which Mr. Thiele introduced in the State Assembly but which has yet to see parallel legislation in the State Senate, would allow East End towns to create a new half-percent tax on the sale of homes selling for more than $1 million in Southampton, East Hampton and Shelter Island towns, and more than $750,000 in Riverhead and Southold towns.

Under the proposal for what Mr. Thiele has dubbed the Peconic Bay Region Community Housing Revolving Fund, the revenues raised from the tax would be used to subsidize the purchase price of homes for qualified buyers, in the form of loans that would have to be paid back only upon the future sale of the house.

The loans would be available only to those who already live or work in a given town—or according to other parameters set by each town—and would be limited to half the total purchase price. The subsidy amount would have to be repaid by the homeowners only when they were to sell the home—at a rate proportional to the appreciation of the home’s value during the time the borrower owned it.

“The example I use is that if a resident were to buy an $800,000 house, and got a $200,000 loan [from the fund], and, 10 years later, sold the house for $1 million, they would have to repay the fund $250,000,” Mr. Thiele explained. “You want the homeowner to be able to benefit, but you also want the continuous source of funding available. So the homeowner gets the bulk of the equity—but [the fund] would be made whole also.”

A half-percent real estate transfer tax could be expected to generate about $6 million per year in East Hampton Town and as much as $12 million per year in Southampton Town, Mr. Thiele estimated.

If the state approves the legislation, any of the five towns could opt in or out of the program. In each town that decides to adopt the new tax, voters would have to approve the measure at the polls—and it would not likely be on the ballot until the fall of 2019, at the earliest.

Mr. Thiele acknowledged this week that the bill likely is not in its final form, and that introducing it in the Assembly is intended to start serious discussions about the concept among local lawmakers, real estate and building interests, and affordable housing advocates.

“It sounds like it could work,” Southampton Town Supervisor Jay Schneiderman said on Monday. “It’s sort of a luxury tax that would go toward spurring affordability. It’s an interesting idea, I’ll say that.”

The island town of Nantucket, Massachusetts, has a law similar to what Mr. Thiele has proposed, tacking a “fee” onto all home sales over $2 million to fund the creation of affordable housing.

The fund would be targeted at helping first-time homebuyers, not funding public housing or multi-family projects, Mr. Thiele said.

He noted that recent changes to federal tax law, which eliminated deductions for state and local taxes, have put a new burden on those considering purchasing their first home.

“You can’t solve every problem with one program,” Mr. Thiele said. “If you’re buying your first home, those deductions can be the difference for some people being able to make that mortgage payment or not. So this is a good time to be trying to provide increased opportunity.”

East Hampton Town Supervisor Peter Van Scoyoc was somewhat skeptical of the approach on first hearing of it, saying that creating new “affordable” housing for workers who are not necessarily interested in buying, as opposed to lowering the cost to homebuyers, may be his town’s more urgent need. He also worried that subsidizing home buying would not help boost the supply of affordable houses as market prices continue to rise.

“You’re subsidizing to allow people a leg up to homeownership—but that’s where it ends,” he said. “It doesn’t stop the continual slide of properties out of reach. There’s homeownership, and there’s the ability for working people to live here. They may not be the same thing.”

The transfer tax is Mr. Thiele’s second attempt to find a way to tap the gargantuan amounts of money being spent each year on local real estate to help working-class residents find housing. He had previously discussed the possibility of generating revenue for affordable housing by creating a “McMansion tax,” in the form of additional local fees on the sale or construction of homes exceeding 3,000 square feet. But, he said this week, that proposal was staunchly opposed by construction industry representatives and was shelved. He said he hopes the new approach will find more support.

With the bill introduced, Mr. Thiele said the next step will be to take it to town lawmakers at next month’s meeting of the East End Supervisors and Mayors Association and to discuss with trade and real estate groups.

There is no end to this guy and the rest of the New York politicians and their taxation. Fred Thiele needs to go along with the dinosaur Ken Lavalle and his double-dipping pension. They have single-handedly made Eastern Long Island so expensive.

You know, I am not a tax hawk normally, as we need taxes to properly run schools and governments. But this is the most idiotic thing I've heard in a while. Why not take 1/2 of the percentage from the 2% transfer tax the CPF collects for this purpose, another tax that Fred designed. There are hundreds of millions in that account on the East End. Why not go back and work that out, and while at it make it more reasonable to use for historic structures, not just open space. They just reworked CPF for ...morewater quality last year, so we know it can be done. The concept of helping with affordable housing is laudable, but adding a new tax for it is a non-starter.

If we want to use tax money to subsidize affordable housing, it should be done through a broad-based tax. Putting the entire burden on a small number of tax payers is good for politicians, but unfair to taxpayers. I feel the same way about the CPF.

How is it unfair to taxpayers? Especially the ones already struggling to live here? It’s a tax on newcomers who clearly have the money. How is a tax a nonstarter?! How on earth do you create affordable housing without creating revenue? This entire place talks out of both sides of their mouth all day long. Good on you Fred, thanks for trying!

There won’t be any “newcomers” or at least significantly fewer. The CPF tax is absurd, and it has more money than it could ever use for the purpose it was established. It has stretched environmentally sensitive acquisitions to a head scratching level. Maybe Taxing Fred should legislate CPF funds for affordable housing. Not as much of a stretch as some of its acquisitions.

Sounds like the local hacks have learned how to conduct municipal wealth redistribution. NY State doesn't have an income problem. It has a spending problem. The people that own real estate here pay some of the highest real estate taxes in the nation. If they would stop stealing it and giving it to their friends, they would have some leftover to cover affordable housing.

Prosper at the expense of others? Why is the government in the business of social engineering by taxing some and giving to others via subsidized housing? The recipients of these monies can work their way up the ladder and move where they feel entitled to live.

let's see, anti capitalism ? CHECK class envy ? CHECK Throw a government run Ponzi scheme? sure , why not. You nailed the Democrat Party talking points , congrats.You fail to comprehend the most basic concept of business and want to confiscate fund from others because they are able to afford a multi million dollar home . Not sure how you can claim is a pillar of American life, perhaps you need to assimilate a bit more.

The only ones truly "left behind" are those who choose not to work their tails off. The proof is in the pudding, our newly arrived immigrants work multiple jobs and move up the ladder , without the benefit of language skills and higher education. You seemingly despise despise our current system JuneZ, not sure why, perhaps the work is too much for you?

saying that prospering at the expense of others is a "pillar of American life" and following that negative statement with the higher profit margin statement shows your disapproval of the capitalist system. If you are pro capitalism please enlighten us.

I have skeptical views on unbridled capitalism, but so do most people. That's why we have a mixed system.

In this country there are winners and losers. Winners win at the expense of the losers. I don't think that's controversial...or do you think that a wage is an accurate representation of the value each employee creates for the company?

A wage is a fairly accurate representation, if you are a fair employer, to the success of the the company. There are always exceptions, but I believe that a strong company comes from not only its leadership but its employees and those employees need to be rewarded.

Sure another rational observer could arrive at a different answer. I would wonder whether that "observer" has ever run a business and if not just how much credibility he would think he has. But everyone is entitled to their "opinion" Everything is easy from behind a keyboard.

You see, I suggest that paying employees what they are worth is a benefit to the health of a company and its employees and you, being the contrarian that you can't help being, try to turn the narrative into one of ...moreyour trap hypotheticals.

Fred, how about first time home buyers do it the old- fashioned way, work like a dog, save up and buy the home based upon your own sweat and blood. Oh, I forgot, todays young people spend their money on tattoos, Starbucks coffee, and designer clothes. Socialism doesn't work Freddy boy. There's plenty of jobs out there, get three of them and save, like yours truly did. Never had a new car untiI I purchased my house in Hampton Bays. Your 2% LPF tax made it more difficult to buy my first house, thanks ...moreFred.

I certainly don’t agree that someone working for a living is a loser. Nor do I feel their employer is a winner. They are both part of the awesome system we have, one can work their tail off and rise through the ranks, one can choose to start their own business and work their tail off to grow that business, there is no limit to what can be accomplished , the key is HARD WORK.

What is your definition of rich Juney B? Not everyone who works hard is guaranteed their vision of success but rarely is one successful without first working hard. You seem to think that working hard without direction or vision is a guarantee of something.

So prescient, that boy---has a Tweet for every occasion! Here's one from February 25, 2015. Note the heck out of the illiteracy: "@realDonaldTrump If the Dow Joans ever falls more than 1000 "points" in a Single Day the sitting president should be "loaded" into a very big cannon and Shot into the sun at TREMENDOUS SPEED! No excuses!" Bet y'all didn't know the Dow was a female, did you? Jaysus.

Nothing notable here. Most of what June Bug posts is as credible as this tweet. Had it not been pointed out by others, the dishonest filth would have been happy to let it remain. By any means necessary is June's motto.

If Fred really wanted to make it more affordable to buy a house, he should work to lower taxes. Here's a couple of ideas to start with:1) Provide additional tools to crack down on illegal multi-family housing which helps drive the ridiculous school taxes. (see article on HBSD suing SHT over illegal rentals)2) Make it illegal to use tax payer dollars for confidential settlements of any sort, either directly or indirectly.(see multiple articles on SHSB paying ...moreout hundreds of thousands of dollars in settlements) 3) Pass legislation getting rid of NY's deepest pocket rules. In any settlement only the people actually directly responsible should be liable for damages. (see article on taxpayers footing bill for STPD members harassing other STPD members)4) Put an end to public pension double dipping. (see article on STPD chief)5) And here's a big one: Stop stealing the money I worked for to give it to people who choose not to work as long or hard as I did.(see article above)6) ...